where there is potential for growth, but it’s
in its very early days. There’s not a huge
volume in that area, but we think cyber security is an important issue that companies
have to get their minds around—and we’re
well positioned to help them with it.

QIn the six months since you’ve taken the helm as CEO, what isthe biggest challenge that you’ve per-sonally faced?

AI’m trying to infuse a sense of clarity as to our core performance objective. And in particular if there is one
thing I would emphasize, it’s value over
volume. We’re more than large enough
as a company, and our mission is to be
the most valuable insurance company
in the world, not the largest. So how do
we get there?

It’s by being the most valuable in
the eyes of our customers, in the eyes of
our employees, our regulators and our
host governments. And it means we have
to measure what they value. We have to
really get to the heart of which products
and services that we provide add the most
value—and do more of them and less of
the ones that don’t. That may mean we
trim back on some areas and grow in others, and that to me is a big challenge.

QThe shift away from volume to val- ue: Is that a tough cultural change?And if so, how are you achieving inter-nal buy in?

AThe first thing is that we align peo- ple’s incentives to doing the rightthing, and we’ve instituted rigorous per-formance metrics in the last couple ofyears where we do relative rankings ofindividuals. But while the change processis aided by incentives, most importantlypeople just like to be part of a winningteam. And there’s no better incentive thanhaving customers tell you that they wantto come back and renew their policy withyou; or if they left you during the crisis,that they want to come back to you.QSpeaking of the crisis, and the bailout which gave ownership of the com-pany to the American people, what has itbeen like working with the government?AWe’ve obviously had a very close relationship with the governmentthrough the assistance that we’ve receivedfrom both the U.S. Treasury and the NewYork Federal Reserve. We’ve been very

Chartis conducts a comprehensive review
of its net-loss reserves at the end of every year,
which is a complex undertaking given the long-term nature of our business…As of June 30, 2011,
Chartis maintained reserves of $71 billion.”

Digital subcribers click here: Hancock talks
about Chartis’ $4 billion-plus reserve charges and the
state of the company’s technology since the bailout.

Hancock On Reserves

pleased with the people we’ve dealt with inboth. And I was very pleasantly surprisedwith the constructive and pragmatic waythat we’ve operated with those who haveworked with us. And they’ve allowed usto get on and do our jobs in a commercialway to meet our customers’ needs.QWhile we’re on the subject of the government, what are some of yourtop concerns on the federal-legislationfront—FIO, FSOC, et cetera?AWashington is obviously concerned about the regulatory framework forthe industry and looking to work to-gether with international regulators tocome up with something that respondsto the increasing interconnectedness oflarge financial institutions. The changesthat may come from the regulatory frontare still somewhat opaque, but it’s quitelikely that we will be regulated at somepoint by the Federal Reserve and prob-ably as a “sifi”—a systemically importantfinancial institution.

2008

has written credit-defaultswap contracts. Greenberg(pictured), who felt the priorgovernment-arrangement’sterms were “strangling thecompany,” says the renegoti-ated bailout should help AIG’sefforts to sell off assets.Outside the company, com-petitors begin criticizing AIG’sconduct in the marketplace asit pursuescommercial-insurancebusiness.Then-Liber-ty MutualChairman,CEO and President EdmundKelly says AIG is “doing somevery stupid things in themarket” to retain business.

Moor, still president and
CEO of AIG’s P&C business,
responds, “Commercial
insurance is not sacrificing
underwriting integrity to retain
market share. I believe that
allegations of excessive
price-cutting are coming from
certain carriers frustrated by
their inability to win significant
market share from us.”